Logistics

Despite modest industry growth for logistics companies, profit margins have been low or have decreased in recent years.

The challenges faced by logistics companies include a highly fragmented competitive landscape, industry overcapacity, and price leakage stemming from decentralized operations. One answer for freight forwarding companies is to manage scale more effectively. Organizations in contract logistics can find growth opportunities in smartly targeted vertical and geographic segments.

Some success factors for high returns are overarching, while others differ by market segment. Organization and operations require a focus on efficiency, while others, such as balancing business portfolios and human relations management, must focus on differentiation.

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Four Success Factors for Transportation and Logistics

To achieve profitable growth, companies in transportation and logistics should consider four success factors to adapt their traditional business models to the changing market environment.

Companies across all segments should design organization and governance structures to improve efficiency and differentiate themselves through IT and big data capabilities, HR excellence, dynamic value pricing, and balanced portfolios.

Road-transport companies should design lean operations and improve their overall network’s productivity to generate maximum revenues from their fleet. They should also improve capabilities for managing tenders and contracts, and focus their business on the most attractive customer industries and markets.

Freight forwarders need to achieve scale and rigorously manage capacity. They can differentiate themselves by providing high-quality, end-to-end service and deploying an effective sales force.

Contract logistics providers should design standardized offerings that can be tailored to customers’ needs. Building long-term relationships and becoming leaders in innovation will be essential for maintaining a competitive advantage.

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